LEADING shares in Europe and on Wall Street tumbled yesterday, hit by a wave of profit-taking, renewed market turbulence in Asia, more bad news from Brazil and worries that US interest rates may be on the rise.
Panic selling ripped through global debt markets over fears that Japanese investors would take their money out of US and European paper after yields between Japanese and US bonds narrowed.
In New York, the Dow Jones Industrial Average, down 140 points at one stage, closed 71.58 points lower at 9274.58. Earlier in London, the benchmark FTSE-100 index ended 0.6 points higher at 6013.0, having been as low as 5915.2 in early trading.
The direction of interest rates weighed heavily on British and US markets. Analysts said Wall Street's big worry is that the
Federal Reserve's policy-setting Federal Open Market Committee, which started a two-day meeting yesterday, may show a bias toward raising interest rates.
American and European investors were rattled by signs of fresh turmoil in Asian bourses. Crisis-torn Brazil added to market jitters when it announced a new president of its central bank for the second time in three weeks, naming an aide to billionaire speculator George Soros for the top job.
On the London Stock Exchange, mid-range stocks continued to shine with the FTSE-250 index finishing 93.5 points firmer at 5215.3 while March gilt futures fell by 0.17 to 119.89 in line with other weak bond markets.
Among the top financials, Bank of Scotland climbed by 26.5p to 808p and Royal Bank of Scotland improved by 47.5p to 1145p and Barclays was another winner, up 68p to 1458p.
The housing sector was given a boost by Crest Nicholson, described as a barometer of the trade. It has reported bumper
profits and record house sales for the year. Shares built up 3.5p to 125p.
Its prospects were helped
further by news from the Halifax
saying that house prices rose 0.5% in January and were up 4.4% on the year - this compared with a 0.1% drop in December.
Brokers at Deutsche Bank took a less positive view and downgraded key mortgage company stocks.
Most were unaffected, with Alliance & Leicester advancing 14.5p to 792.5p. Abbey National firmed by 43p to 1248p and
Halifax closed 16.5p higher at 733.5p.
The high-flying telecoms sector took a beating in yesterday's
dealing. Orange tumbled 45p to 889.5p and Colt Telecom plunged 51p to 1290.5p.
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